Seven & I Holdings, Asia’s biggest food and retailing group, said on Thursday that it would close 140 of its Denny’s and other restaurants in Japan afterreporting its first operating profit fall in six years.

Tokyo-based Seven & I said it hoped the closures, which will affect about a quarter of the Denny’s in Japan, would bring its lossmaking restaurant division back to profit.

Seven & I operates the casual 24-hour eateries independently of the original US Denny’s chain.

Japanese shop and restaurant operators are struggling to convince consumers to continue spending as an economic boom that began in 2002 shows signs of fading.

With the market saturated, some retailers are looking overseas in search of higher profit.

Seven & I has also been hurt by the cost of implementing an electronic payment system at its 7-Eleven convenience stores.

It said operating profit fell 2 per cent to Y281.1bn ($2.7bn) in the year ended February 29 while net income dropped 2.1 per cent to Y130.7bn.

The results follow disappointing earnings from Aeon, Japan’s second-biggest retailer, which also reported a fall in profit this week.

Aeon also announced a restructuring, saying it would close or revamp about 100 of its supermarkets over the next three years.

Seven & I plans to close about 600 of its 12,000 7-Eleven stores in addition to the Denny’s restaurants.

The company is forecasting renewed operating profit growth of 4.6 per cent this year as it benefits from the restaurant restructuring, better convenience store sales and installation of more fee-generating cash machines at its shops.

Both Seven & I and Aeon could face a difficult year in their US operations as economic growth and consumer spending in the country slow.

Aeon is reorganising its US-based Talbot and J Jill stores, where it aims to return to profit by cutting costs and focusing on its core business of women’s clothing. Aeon also plans to triple its store network in China, Malaysia and Thailand to 190 over the next three years.

● Some Japanese retailers are still hitting the mark with consumers, however. Fast Retailing, best-known for its Uniqlo casual clothing brand, on Thursday reported a 26 per cent rise in net income to Y28.6bn for the six months ended February on the back of strong sales of winter clothing. The company expects full-year profit to rise 29 per cent to Y41bn.

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